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Fintech Is a Driver of Global Financial Inclusion

Fintech Is a Driver of Global Financial Inclusion
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Tuesday, 08 May 2018 09:10 AM Current | Bio | Archive

The ongoing advances in financial technology, or fintech, are fundamentally changing the way financial services are delivered to consumers.

All over the world, fintech companies are disrupting the finance industry. Enhanced by significant and increasing investment, fintech is reshaping this sector in epic fashion.

However, perhaps the most remarkable and valuable long-term result of fintech, is increased financial inclusion.

Fintech is speeding up the development and progress of global financial inclusion. It provides access to financial services to people who may live in remote areas, who perhaps rely on income from elsewhere, or who may be unable to use financial services because of bias or prejudice from traditional financial organizations who solely deal with wealthy clients.

Fintech aiding businesses and individuals to effectively manage, save and invest their funds can only result in a better society for everyone. Across the globe.

As such, to my mind, it is essential for companies to not only perform well from a financial perspective, but also focus on making a positive contribution to society. Should firms disregard or overlook wider social matters today, they will lose out in the long-term, as society is always looking to companies to serve a social purpose.

In addition, a report by American research group, the Brookings Institution (Brookings Financial and Digital Inclusion Project Report) says that because fintech has the potential to dramatically improve financial inclusion, incumbents, new entrants, government agencies and policymakers must collaborate in order to harness the full potential of fintech.

The report states: “The potential benefits of leveraging technology in the financial services sector include reducing costs, enhancing opportunities to meet customers’ evolving needs with new financial service offerings and platforms, and streamlining operations and speeding processes.”

Moreover, the report urges governments to set up national financial inclusion entities, and establish targets linked to financial inclusion progress.

“This dialogue will enable countries to identify promising financial inclusion-related interventions…for advancing access to and usage of quality, affordable financial services,” the report says.

Christine Lagarde, IMF Managing Director said to CNBC last year, global financial institutions are taking risks by not watching and understanding emerging financial tech products that are starting to shake up the financial services and global payments system. "I think that we are about to see massive disruptions," said Ms. Lagarde.

One of these so-called ‘massive disruptions’ came in the form of blockchain. Public perception has rocketed in regard to blockchain - the technology that underpins the likes of Bitcoin - said to be the world’s next major disruptive technology.

Cryptocurrencies such as Bitcoin, Ethereum, Ripple, Dash and Litecoin, amongst others, have propelled blockchain into the limelight, particularly because of the ability to transfer digital currency without a ‘middle man’ to validate or allow the transaction. They are becoming an ever-more mainstream asset for investors. This has been seen in impressive month on month increases in registration of the deVere Crytpo exchange app.

It suggests that these individuals are increasingly understanding and valuing the need and demand for digital, global currencies in a digitalized, globalized world.

The core of the blockchain technology is administered by a software protocol that safeguards details of each transaction. These records are decentralized, providing substantial advantages over conventional funding and transaction platforms.

As well as eradicating the necessity for intermediaries, this technology creates secure data that is readily accessible. Therefore, putting blockchain technology as a leading solution to increasing global financial inclusion without mounting costs.

According to Jason Kelley, IBM Global Manager for Blockchain Services: “Blockchain allows people to exchange value without knowing the identity of each other necessarily, in a secure way on the back end. On the front end, its simplicity, transparency and trust. Think of all the cost, time and often waste that happens in the exchange of value – blockchain rids that from the system.”

Papua New Guinea has become the latest country to ride the blockchain train, exploring ways to feasibly address some of the country’s economic woes. The Bank of Papua New Guinea, has been working in partnership with the Australian government-funded PNG Governance Facility and also Abt Associates, an organization working on poverty relief.

Jane Thomason, the chief executive of Abt Associates-Australia commented: “Some of it is noise and some real, but the big proponent of blockchain is actually the Bank of PNG. The governor is interested in financial inclusion and 85% of the population are ‘unbanked’, so he has been keen to try and examine how blockchain is going to help them with the issue.”

Of course, we’ve seen many trends showing the degree to which the fintech revolution has thrived around the world in recent years.

Michael Schlein, the president and CEO of @Accion, summarizes fintech’s role in financial inclusion: “By focusing on disruptive new technologies, passing enabling regulations, and designing high-quality, affordable financial products and services that benefit users, we can ensure that every individual has the means to reach their economic potential. We can create a financially inclusive world.”

Indeed, fintech provides enormous potential in improving the facilitation of financial services to large sections of the population, allowing more and more people to fully participate in the economy.

Financial inclusion is beneficial both for individuals, businesses and the global economy as a whole, driving long-term, sustainable economic growth and assisting in documenting a greater segment of the economy to enhance transparency.

Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.

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NigelGreen
Financial inclusion is beneficial both for individuals, businesses and the global economy as a whole, driving long-term, sustainable economic growth and assisting in documenting a greater segment of the economy to enhance transparency.
fintech, driver, global, financial, inclusion
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2018-10-08
Tuesday, 08 May 2018 09:10 AM
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